Exploring online shopping behavior in Dhaka, Bangladesh

Abstract

Compared to the Western world, online shopping penetration in Bangladesh is relatively low – a mere 3% of people do online shopping there. However, the country encountered a surge in online buying propensity in 2020 due to COVID-19-related lockdown measures. Online shopping increased in the country by 70 % in 2020 compared to last year. It is forecasted that business-to-customer e-commerce will double by 2026. 50 % of the expanding e-commerce consumers reside in the capital, Dhaka. This study aims to characterize the growing number of online shoppers and capture the heterogeneous impact of online shopping on physical shopping frequency. The study uses data from a survey conducted during the last two months of 2021. Responses from 308 individuals were used to develop a binary logit model to capture the heterogeneity among online shoppers.Additionally, a generalized ordered logit model was developed to capture the heterogeneous change in the physical shopping frequency due to online shopping participation. The study identified exciting gender differences. In Dhaka, females are more likely to shop online than males. Moreover, for females, online shopping is a substitute for physical buying, i.e., female online buyers are almost 50 % more likely to reduce their physical shopping frequency than males. On the other hand, car owners are more likely to engage in online shopping in the city, and when they do, their physical shopping frequency is more likely to be reduced than non-car owners. The latter result indicates that the diffusion of innovation hypothesis is more likely to be at play in Dhaka.